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Life Care Centers of America, Inc. v. Estate of Neblett

United States District Court, W.D. Kentucky, Paducah Division

December 17, 2014

LIFE CARE CENTERS OF AMERICA, INC. et al., Plaintiffs,
v.
THE ESTATE OF FRANCES M. NEBLETT, et al., Defendants.

MEMORANDUM OPINION AND ORDER

THOMAS B. RUSSELL, District Judge.

This matter is before the Court upon Plaintiffs' motion to compel arbitration and for an injunction. (Docket #9). Defendants have responded. (Docket #10). Plaintiffs have replied. (Docket #11). This matter is ripe for adjudication. For the following reasons, Plaintiffs' motion to compel arbitration (Docket #9) is DENIED.

BACKGROUND

Frances M. Neblett was a resident of Parkview Nursing and Rehabilitation Center ("Parkview") from November 12 to November 17, 2013. As part of the check-in process, Neblett signed an agreement to submit all disputes to arbitration. (Docket #1). While at Parkview, Neblett allegedly "suffered physical and emotional injuries due to inadequate care" which resulted in her death. (Docket #5).

Neblett's estate and Neblett's spouse, Floyd Neblett, filed a state court action against Life Care Centers of America, Inc. ("Life Care"), Consolidated Resources Health Care Fund I, L.P. ("Consolidated Resources"), and Lori Moberly, the administrator of Parkview. Neblett's estate brought claims of negligence, violation of Neblett's statutory rights, and wrongful death. Floyd Neblett brought claims for loss of spousal consortium and wrongful death. (Docket #1, Ex. 2).

Life Care and Consolidated Resources filed the present action seeking to enjoin the state court action and compel arbitration pursuant to the Federal Arbitration Act ("FAA"). 9 U.S.C. § 4. Life Care and Consolidated Resources now move to compel arbitration on all claims and to enjoin the state court action. (Docket #9). Defendants respond that Floyd Nesbett's wrongful death and loss of consortium claims are not covered by the arbitration agreement because Floyd Nesbett did not sign that agreement.

STANDARD

Congress enacted the United States Arbitration Act of 1925, more commonly referred to as the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16, in response to the common law hostility toward arbitration and the refusal of many courts to enforce arbitration agreements. The United States Supreme Court has since interpreted the FAA as codifying "a national policy favoring arbitration when the parties contract for that mode of dispute resolution." Preston v. Ferrer, 552 U.S. 346, 349 (2008). The Supreme Court has further stated that the FAA's underlying purpose is to put arbitration agreements "upon the same footing as other contracts." EEOC v. Waffle House, Inc., 534 U.S. 279, 289 (2002) (quoting Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991)). The FAA establishes a procedural framework applicable in both federal and state courts, and also mandates that substantive federal arbitration law be applied in both. See Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995); Southland Corp. v. Keating, 465 U.S. 1, 16 (1984).

Section 3 of the FAA permits a party seeking to enforce an arbitration agreement to request that litigation be stayed until the terms of the arbitration agreement have been fulfilled. 9 U.S.C. § 3. Before compelling arbitration, the Court "must engage in a limited review to determine whether the dispute is arbitrable." Masco Corp. v. Zurich Am. Ins. Co., 382 F.3d 624, 627 (6th Cir. 2004) (quoting Javitch v. First Union Sec., Inc., 315 F.3d 619, 624 (6th Cir. 2003)). This review requires the Court to determine first whether "a valid agreement to arbitrate exists between the parties, " and second whether "the specific dispute falls within the substantive scope of the agreement." Id. (quoting Javitch, 315 F.3d at 624).

"Because arbitration agreements are fundamentally contracts, " the Court must "review the enforceability of an arbitration agreement according to the applicable state law of contract formation." Seawright v. Am. Gen. Fin. Servs., Inc., 507 F.3d 967, 972 (6th Cir. 2007) (citing First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943-44 (1995)). In Kentucky, as in all jurisdictions, a contract is only enforceable if both parties agree to be bound by it. See, e.g., David Roth's Sons, Inc. v. Wright & Taylor, Inc., 343 S.W.2d 389, 391 (Ky. 1976).

DISCUSSION

The parties have raised two issues before the Court: (I) if a decedent signs an arbitration agreement, does it bind her spouse into arbitrating the spouse's wrongful death claim; and (II) if a decedent signs an arbitration agreement, does it bind her spouse into arbitrating the spouse's loss of consortium claim.

I. A wrongful death claim is an independent claim belonging to the spouse and is not bound by the decedent signing an arbitration agreement.

A "decedent cannot bind his or her beneficiaries to arbitrate their wrongful death claim." Ping v. Beverly Enters., 376 S.W.3d 581, 599 (Ky. 2012). In Ping, the Kentucky Supreme Court explained that under Kentucky law a "wrongful death claim is not derived through or on behalf of the resident, but accrues separately to the wrongful death beneficiaries and is meant to compensate them for their own pecuniary loss." Id. Specifically, the right to bring a wrongful death claim is created by statute for the benefit of the decedent's spouse. KRS § 411.130 (2014); Ping, 376 S.W.3d at 598. The spouse has an independent claim for wrongful death, and since the spouse has not signed the arbitration agreement, the spouse cannot be held to it. Ping, 376 S.W.3d at 600 ("Arbitration is a matter of contract, ... It is not ...


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